Adaptation
Official IPCC definition: In human systems, the process of adjustment to actual or expected climate and its effects, in order to moderate harm or exploit beneficial opportunities. In natural systems, the process of adjustment to actual climate and its effects; human intervention may facilitate adjustment to expected climate and its effects.
Translation: Making changes to live with the impacts of climate change.
Climate change is already happening. Heat waves, wildfires and floods are getting worse. People will have to find ways to live with these threats. Los Angeles, for example, is planting trees to help people stay cooler. Coastal cities like Miami may need sea walls to protect against floods. More “adaptation” actions will be needed as climate change gets worse.
Biodiversity
The variety of living species on Earth that create a balanced environment.
Carbon zero, or carbon neutral
No carbon is emitted through production or other activities, therefore – in contrast with net zero – no carbon needs to be captured or offset. Wind, nuclear and solar energy are examples of zero-carbon sources.
Official IPCC definition: Carbon neutrality is achieved when CO2 emissions created by human activity are balanced globally by anthropogenic carbon dioxide removals over a specified period. Carbon neutrality is also referred to as net-zero carbon dioxide emission.
Translation: Adding no net CO2 into the air. But this does not mean you can’t add any CO2; it just means if you do add any into the air, you must take out the same amount.
The IPCC warns that the world needs to be carbon neutral by 2050 to avoid a serious climate crisis. This means using both “mitigation” to reduce the amount of CO2 added to the air and “carbon dioxide removal” to take CO2 out of the air.
CCCA
Collective Commitment to Climate Action, launched as part of the Principles of Responsible Banking (PRB) in 2019. Through the CCCA, a group of 38 banks have committed to aligning their business strategies with the temperature goals of the Paris Climate Agreement, which include limiting global warming to well below 2 ̊C, preferably to 1.5 ̊C, compared with pre-industrial levels.
Climate change mitigation
Refers to efforts to reduce or prevent emission of greenhouse gases and limit global warming to the terms of the Paris Agreement.
Circular economy
A model that redefines the economy to ‘design out’ waste and pollution, keeping products and materials in use for as long as possible.
CO2 removal
Official IPCC definition: Carbon dioxide removal methods refer to processes that remove CO2 from the atmosphere by either increasing biological sinks of CO2 or using chemical processes to directly bind CO2. CDR is classified as a special type of mitigation.
Translation: Taking carbon dioxide out of the air.
The amount of carbon dioxide in the air has been increasing for many years. In 2019, there was 50 percent more of it than in the late 1700s. Planting trees and restoring grasslands can remove carbon dioxide from the air. There are also carbon dioxide removal technologies that store it underground or in concrete, but these are new and not widely used.
Conference of the Parties (COP)
The COP is the supreme decision-making body of the UN Framework Convention on Climate Change (UNFCCC). All states and countries that are parties to the convention are represented on the COP, which meets every year in a different city.
ESG (Environmental, social and governance)
A way of judging a company based on factors other than financial performance, such as employee satisfaction or policies relating to the environment.
GFANZ
Glasgow Financial Alliance for Net Zero, which brings together leading net-zero initiatives from across the financial system to progress the transition to net-zero emissions by 2050. It is chaired by Mark Carney, the UN Special Envoy on Climate Action and Finance, and comprises more than 160 organisations, which are responsible for assets in excess of $70tn.
Green finance
Any financial initiative, process, product or service designed to protect the natural environment and support the transition to a sustainable, low-carbon world. Green bonds play an important role in this – the World Economic Forum has reported that the global green bond market could be worth $2.36tn by 2023 (NN Investment Partners).
IPCC
The Intergovernmental Panel on Climate Change – a UN body that assesses the science related to climate change. The IPCC provides regular assessments of the scientific basis of climate change, its impacts and future risks, and options for adaptation and mitigation.
The Kyoto Protocol
Launched in 1997 to commit developed country parties to emission-reduction targets. The Kyoto protocol recognises that developed countries are principally responsible for current levels of greenhouse gas emissions, as a result of more than a century of industrial activity.
Mitigation
Official IPCC definition: Mitigation (of climate change): a human intervention to reduce emissions or enhance the sinks of greenhouse gases.
Translation: Stopping climate change from getting worse.
When people talk about “mitigation” they often focus on fossil fuels — coal, oil and natural gas — used to make electricity and run cars, buses and planes. Fossil fuels produce greenhouse gases, including carbon dioxide. When these gases are released, they linger in the atmosphere. They then trap heat and warm the planet.
Some ways to mitigate climate change include using solar and wind power instead of coal-fired power plants; making buildings, appliances and vehicles more energy efficient so they use less electricity and fuel; and designing cities so people have to drive less. Protecting forests and planting trees also help because trees absorb greenhouse gases from the atmosphere and lock them away.
NDCs
Nationally Determined Contributions are plans outlined by each Party that highlight climate actions, including targets, policies and measures that governments aim to implement in response to climate change. NDCs are a central element for implementing the Paris Agreement and are centred around national determination.
Net zero
The point at which a country, industry, company, etc. removes as many emissions as it produces.
Net-Zero Banking Alliance
An industry-led alliance of 55 banks from 28 countries and the banking element of the Glasgow Financial Alliance for Net Zero (GFANZ). Represents almost a quarter of global banking assets (more than $37tn). This UN-convened initiative combines near-term action with accountability, with members committing to aligning their lending and investment portfolios with net-zero emissions by 2050. Intermediary targets have also been set for 2030.
Paris Agreement
A legally binding international treaty on climate change. It was adopted by 196 Parties at COP21 in Paris, on 12 December 2015 and entered into force on 4 November 2016. Its goal is to limit global warming to well below 2 ̊C, preferably to 1.5oC, compared with pre-industrial levels.
Principles for Responsible Banking
A unique framework for ensuring that signatory banks’ strategy and practice align with the Sustainable Development Goals and the Paris Agreement.
Race to Zero
The world’s largest net-zero alliance, with more than 3,800 members, representing 15% of the global economy and 21% of the world’s biggest companies. Race to Zero is a global campaign aimed at inspiring leadership and action from businesses, cities, regions, and investors for a zero-carbon recovery and a sustainable future.
RCPs
Representative Concentration Pathways – four potential scenarios developed by the IPCC, which set out alternative views of the future to 2100 based upon action taken to tackle climate change. The four RCPs of greenhouse-gas concentration range from very high (RCP8.5) to very low (RCP2.6), depending on action taken.
Sustainable development
According to UNESCO, the “overarching paradigm of the United Nations”. There are four intertwined strands to sustainable development: society, environment, culture and economy.
Official IPCC definition: Development that meets the needs of the present without compromising the ability of future generations to meet their own needs and balances social, economic and environmental concerns.
Translation: Living in a way that is good for people alive today and for people in the future.
In 2015, 193 member states of the United Nations adopted a set of 17 interlinked “sustainable development goals”. TIntended to be achieved by 2030, these goals are aimed at helping countries grow in ways that are healthy for people and the environment. Producing more carbon dioxide than the planet can manage is an example of development that is not sustainable and that’s causing climate change.
Sustainable finance
The inclusion of economic, environmental and social factors in an organisation’s strategy, management, activities and operations; combined with the financing of sustainable economic, environmental and social objectives.
Tipping point
Official IPCC definition: A level of change in system properties beyond which a system reorganizes, often abruptly, and does not return to the initial state even if the drivers of the change are abated. For the climate system, it refers to a critical threshold when global or regional climate changes from one stable state to another stable state.
Translation: When it is too late to stop effects of climate change.
One of the most talked-about tipping points (learn more about them here) involves the collapse of the West Antarctic ice sheet. Some research suggests this collapse may have already started happening. West Antarctica alone holds enough ice to raise sea levels worldwide by about 11 feet (3.3 meters), and if all glaciers and ice caps melt, sea levels will end up rising about 230 feet (70 meters).
TCFD
The Financial Stability Board’s Task Force on Climate- related Financial Disclosures (TCFD) is a market-driven initiative, set up to develop a set of recommendations for voluntary and consistent climate-related financial risk disclosures in mainstream filings.
UNEP FI
The UN Environment Programme Finance Initiative – a partnership between the UNEP and the global financial sector to promote sustainable finance. The UNEP FI works with more than 400 members banks, insurers and investors to deliver initiatives that make a positive impact on the planet.
UN Sustainable Development Goals
A set of 17 objectives agreed by 193 countries in 2015 to address the major environmental, social and economic challenges of our time. The goals include targets around sustainable communities, clean energy, responsible consumption and climate action.
UNFCCC
United Nations Framework Convention on Climate Change; the key international treaty providing a global framework for combating climate change, ratified by 197 parties.
UNFCCC Standing Committee on Finance (SCF)
The United Nations body responsible for monitoring, measuring and reporting flows of climate finance. The most recent SCF meeting took place from 11-14 October 2021.
To find out more about sustainable investing terms relevant to advisers, turn to page 52 of this issue. CB
Unprecedented transition
Official IPCC definition for “transition”: The process of changing from one state or condition to another in a given period of time. Transition can be in individuals, firms, cities, regions and nations and can be based on incremental or transformative change.
Translation: Making big changes together to stop climate change — in a way that has not been seen before.
In 2015, countries around the world agreed to try to keep the planet from warming more than 1.5 degrees Celsius (2.7 F). Among the biggest sources of global warming are coal-fired power plants. Quickly shifting the world over to renewable energy, such as wind and solar power, would be an unprecedented transition. Without big changes, climate change could make the world unlivable.
Sources
https://theconversation.com/a-quick-guide-to-climate-change-jargon-what-experts-mean-by-mitigation-carbon-neutral-and-6-other-key-terms-167172 (Creative Commons licensed)
https://unfccc.int/process-and-meetings/the-convention/glossary-of-climate-change-acronyms-and-terms (Creative Commons licensed)